After the crash, Iceland's women lead the rescue

Iceland's spectacular meltdown was caused by a banking and business culture that was buccaneering, reckless - and overwhelmingly male. Business editor Ruth Sunderland travelled to Reykjavik to meet the women now running the country, and heard how they are determined to reinvent business and society by injecting values of openness, fairness and social responsibility

On Bondadagur, or Husband's Day, the menfolk of Iceland are spoiled by their wives and girlfriends, who serve them with traditional delicacies such as ram's testicles and sheep's head jelly, a recipe for which is handily included in the latest online edition of Iceland Review, alongside the latest bulletins on the economic meltdown.

Icelandic women, however, are more likely to be studying the financial news than the recipes - and more likely to be thinking about how to put right the mess their men have made of the banking system than about cooking them comfort food. The tiny nation, with a population of just over 300,000 people, has been overwhelmed by an economic disaster that is threatening its very survival. But for a generation of fortysomething women, the havoc is translating into an opportunity to step into the positions vacated by the men blamed for the crisis, and to play a leading role in creating a more balanced economy, which, they argue, should incorporate overtly feminine values.

The ruling male elite is scarcely in a position to argue. The krona has collapsed; interest rates and inflation have soared; companies and households which have borrowed in foreign currency are overwhelmed by their debts and unemployment is at record levels. An exodus of young people is feared from the capital only recently held up as a centre of cutting-edge cool. Walking along Laugavegur, touted until a year or so ago as the Bond Street of Reykjavik, the gloom is palpable.

The idea that Reykjavik, an attractive, low-rise provincial place, could be a financial nerve centre on a par with the gleaming skyscrapers of Canary Wharf and Wall Street now seems utterly absurd. Over the past 10 years, however, little Iceland became a test-bed for the new economic order. Led by businessmen such as Baugur boss Jón Asgeir Jóhannesson, a nation previously best known for cod and hot springs reinvented itself as an Atlantic tiger. The Icelanders bought stakes in huge tracts of the British high street, including House of Fraser, Whistles and Karen Millen. Their banks were equally buccaneering, adopting free market reforms with gusto and moving with relish into financial engineering. The upshot: they now owe at least six times the country's income for 2008 and have been taken into state hands.

Unlike in the UK, Iceland's women are at the forefront of the clean-up. The crisis led to the downfall of the government and the prime minister's residence - which resembles a slightly over-sized white dormer bungalow - is now occupied by Jóhanna Sigurdardóttir, an elegant 66-year-old lesbian who is the world's first openly gay premier. When she lost a bid to lead her party in the 1990s, she lifted her fist and declared: "My time will come." Her hour has now arrived - and the same is true for a cadre of highly accomplished businesswomen.

Prominent among them are Halla Tómasdóttir and Kristin Petursdóttir, the founders of Audur Capital, who have teamed up with the singer Björk to set up an investment fund to boost the ravaged economy by investing in green technology. Petursdóttir, a former senior banking executive, and Tómasdóttir, the former managing director of the Iceland Chamber of Commerce, decided just before the crunch to set up a firm bringing female values into the mainly male spheres of private equity, wealth management and corporate advice.

Tómasdóttir says: "Our Björk fund is to focus on sustainable growth. Iceland was the first in the world into the crisis, but we could be the first out, and women have a big role to play in that. It goes back to our Viking women. While the men were out there raping and pillaging, the women were running the show at home.

"We have five core feminine values. First, risk awareness: we will not invest in things we don't understand. Second, profit with principles - we like a wider definition so it is not just economic profit, but a positive social and environmental impact. Third, emotional capital. When we invest, we do an emotional due diligence - or check on the company - we look at the people, at whether the corporate culture is an asset or a liability. Fourth, straight talking. We believe the language of finance should be accessible, and not part of the alienating nature of banking culture. Fifth, independence. We would like to see women increasingly financially independent, because with that comes the greatest freedom to be who you want to be, but also unbiased advice."

Men are in a minority at Audur, but Tómasdóttir is keen to hire more. "There are fewer of them, but they are not tokens, we have hired them on merit. Now, if we have two equally competent people, we would positively discriminate in favour of the man because we want balance," she says, without a flicker of irony.

Even before the credit crunch, Iceland scored highly on measures of sex equality, coming fourth out of 130 countries on the international gender gap index (behind Norway, Finland and Sweden). The rate of female participation in the labour force runs at more than 80%, compared with just over 90% for men; there is generous maternity and childcare provision from the state, along with paternity leave. Most Icelanders remain geographically close to their extended families, making childcare easier, and the distances in Reykjavik are small, so mothers can easily get to their children's schools in a crisis.

Differences between Iceland and the UK are immediately obvious at all levels: the drivers of the coaches taking me to and from the airport were both female, the massage therapist at the female-friendly health spa, male. Similarly the debate about how - rather than whether - women should participate in the reconstruction of Iceland's shattered financial system is a mainstream discussion, whereas it is seen as a fringe issue here.

This egalitarian backdrop has given Icelandic businesswomen a self-confidence their equivalents in the UK quite simply lack, according to one senior British female executive who frequently does deals with Reykjavik.

"There is never a problem with me being a woman, whereas in the UK there is always an undercurrent. Most Icelandic men genuinely view women as equal. They are not shackled with our social and class history, and they don't have all-boys public schools which breed chauvinism. Corporate women in the UK can be very aggressive, because they are defensive and because they have to be. I'm sure Icelandic women will play an even bigger role now because the men have so spectacularly fucked up. We have a lot to learn from them, but we are so entrenched I don't know if it will ever happen."

Jóhanna Waagfjörd, 50, the chief executive of Hagar, which invests in food and fashion retail, is an economist by training. Perched in her third-floor office above the shops in the pristine but near-deserted Smaralind shopping mall in Reykjavik, wearing a chic white shirt and trim fitting jeans, she, like the other Icelandic business women I encounter, looks a good decade younger than her years. If she looks nothing like the standard-issue British woman boss in her sober dress or a navy skirt suit, she sounds nothing like them either. While senior women in the UK are extremely reluctant to introduce feminine, let alone feminist, themes into the conversation, Waagfjörd and her Icelandic sisters talk openly about the womanly and maternal qualities they bring to the boardroom table.

"I don't have children - I decided that because I wanted to be free to pursue my career - but motherhood is a value for all women. Ten or 15 years ago I wouldn't have wanted to say that motherhood was something important, because that was not the rule of the game. But the value you bring as a woman is the maternal aspect, the strength that comes from motherhood."

Tómasdóttir, whose company shares a name with her five-year-old daughter, agrees. "Audur was one of our foremost Viking women, the name means wisdom, strength and happiness, and a clear space. We talk of the company as a daughter."

Tómasdóttir is also unabashed at promoting middle-aged women as a force for good in the boardroom - a taboo in this country, where female executives are more likely to be grabbing, panic-stricken, at the anti-ageing creams than celebrating their midlife energy surge. "I have recently turned 40 and Kristin is 43. We are going through a midlife transition; for men it is a midlife crisis. At 40 most women undergo a self-exploration, and they look at everything: they look at their body and ask, 'am I in the shape I want to be?' They look at their husband, and ask: 'Is this the guy I want to spend the rest of my life with?', and they look at their career and ask: 'Is this really satisfying?' You get to the point where you see there is emotional capital that is never measured or valued in the way it should be. I just want to live in congruence with that side of myself."

The British businesswoman, who, tellingly, prefers to remain anonymous, says this Icelandic attitude to midlife femininity is unimaginable in the British boardroom. "I am in the same age bracket and I cannot conceive of discussing the positive power of the fortyish woman with male colleagues," she says. "They would freak out."

Waagfjörd points a finger at young, inexperienced men who, she says, became too dominant in the boom. "I was in the US for six years, and when I came back 10 years ago, at the age of 40, things had really changed. Suddenly there were a lot of young men about 35 or 30. They used to call to try to sell me derivatives which were really complicated. They thought they were really clever, but they were still living at home with their parents."

Elín Jónsdóttir, a 42-year-old lawyer with two children, worked at the Icelandic financial regulator until 2005 and is now managing director of Arev, an investment firm set up by Jón Scheving Thorsteinsson, the former chief executive of Baugur UK. She believes the boom and bust is not a men versus women situation but a question of different value systems. "During the boom we saw what we would typically say are masculine values, but it is dangerous to stereotype. These so-called masculine values are common in women as well, and the variability within each group is much larger then the variability between the groups."

Nonetheless she believes Icelanders accept women will play a major role in the reconstruction of the economy. "We all feel it is strange when you looked at the banks and the directors were all male, and this is in Iceland where female participation in the workplace is higher than anywhere else in the world. We are beginning to look at companies as old-fashioned if they have only male directors. There is still a bit of a boys' club, with women as outsiders - people know the rules and are comfortable with that - no one was asking the difficult questions. But the boardroom should not necessarily be too comfortable."

Although there is a group of self-confident women taking centre stage in Iceland, the country is still far from being a businesswoman's Utopia. Hrund Rudolfsdóttir, a 40-year-old mother of three, is a director of Milestone, a company specialising in strategic investments in financial services, and sits on the board of Iceland's confederation of employers. She is concerned that, although women her age may benefit from the crisis, younger women could suffer. "Women of my generation with experience will see more opportunities than ever before, because now the whole nation has realised how important it is that you have a diverse group of managers who can ask critical questions. We are seeing unemployment on a big scale for the first time. Young women who should be making their way into middle management may be pushed back. After they have their children they might find it hard to get back into the job market, and some women may choose to opt out."

There is also a fear of the "glass cliff": the worry that, if women do win top jobs, they will inherit very difficult situations, some will inevitably fail, and the cause of equality will be set back. Research from Exeter University has found that companies are more likely to appoint a woman when they are experiencing a crisis, because they are seen as more consensual and less abrasive, though these qualities are not valued so highly at other times. The danger is that, if women become associated with failure, it could actually hinder their advancement. But as Rudolfsdóttir says: "There is a risk, but as women we cannot claim we are capable and then turn away because of that risk."

As the Icelanders are discovering, it can be hard to find women who are entirely unbesmirched by the crisis, since those of sufficient seniority to be credible leaders have themselves come up through the old system; of the two women recently promoted to run Iceland's nationalised banks, Landsbanki and Glitnir, one has already been elbowed aside for these reasons.

Not everyone in Iceland has bought into the idea that women will revolutionise capitalism. "Women would like to think it's their turn now, but it won't be - there will be a bit of fuss for a while but men will keep the real power at the top," said a local taxi driver in his sixties. "I'm not giving you my name, though, because my wife speaks English and she would kill me if she read that."

That is not a view that gains much traction with Halla Tómasdóttir. "If the institutions are under the control of a single group - and now it is men - and they all think the same way, we are not going to make positive changes. For the first time in 100 years we have the chance to create a company, a society, a country, and hopefully a world that is more sustainable, more fair for men as well as women. If we are not going to do that now, then when will we?"